US mortgage applications up 7.8%

Mortgage applications in the US increased last week to the highest level since December as cheaper borrowing costs made refinancing more attractive.

The Mortgage Bankers Association’s index of loan applications rose 7.8 per cent in the week ended May 13. The group’s refinancing measure advanced 13 per cent, while the purchase gauge fell 3.2 per cent.

Mortgage rates at the lowest levels in almost six months mean homeowners can refinance current loans to lower the cost of monthly payments.

At the same time, declining property values indicate potential buyers may wait to see if home prices fall further before entering the market.

‘The housing market is going to bounce around a little bit,’ Paul Dales, senior US economist at Capital Economics in Toronto, said before the report. ‘Both housing starts and home sales are going to remain at pretty weak levels by historical standards.’

The average rate on a 30-year fixed loan decreased last week to 4.6 per cent, the lowest since the end of November, from 4.67 per cent, the mortgage bankers group said.

Borrowing costs reached 4.21 per cent in October, a record-low dating back to when the group’s records began in 1990.
The average rate on a 15-year fixed mortgage dropped to 3.75 per cent from 3.81 per cent, the report showed.

The share of applicants seeking to refinance a loan rose to 66.7 per cent last week from 63.1 per cent the prior week.
Other reports indicate housing has not yet joined areas of the economy that are recovering.

Work began on 523,000 houses at an annual pace in April, down 11 per cent from the prior month and less than the median forecast of economists surveyed by Bloomberg News, figures from the Commerce Department showed on Tuesday.

Date: 19 May 2011 | For the full report, please visit http://www.businesstimes.com.sg

New-Home Recovery Seen as Post-Super Bowl Selling Season Starts

Homebuilder executives and economists predict a post Super Bowl bounce in demand for residential construction as Americans turn their attention from football to another national pastime: house hunting.

The chief executive officers of six of the 10 largest U.S. homebuilders cited the potential of a sales comeback in the spring, traditionally their strongest season, during conference calls in the last four weeks. Housing forecasts from Fannie Mae and the Mortgage Bankers Association show the new-home market will begin a rebound that will last through at least 2012.

A revival in demand for new houses after record-low sales in 2010 may bolster a U.S. economy that’s 19 months into a recovery. Residential construction is a key factor in gross domestic product because it requires the manufacturing of home components such as stoves, cement, tile and furnaces. Richard DeKaser, an economist at Boston-based Parthenon Group, said he expects the homebuilding industry will this year make its first positive contribution to GDP since 2005.

“The spring market is going to be the first test of the proposition that there’s an underlying improvement in new-home fundamentals,” DeKaser said in an interview. “If we don’t see the needle move, it will be very discouraging.”

New-home sales probably will rise 20 percent to 385,000 this year, said David Crowe, chief economist for the National Association of Home Builders in Washington. Fannie Mae, the world’s largest mortgage buyer, projected an 18 percent gain, and the Mortgage Bankers Association estimated a 10 percent advance, according to forecasts posted on their websites.

Spring is a popular time to buy because house hunters often want to have their home finished by July or August, before the start of the U.S. school year in September, said John Burns, CEO of John Burns Real Estate Consulting Inc. in Irvine, California. The weekend after the Super Bowl is traditionally when prospective buyers start looking, he said in an interview.

“If that’s a good weekend for the builders, then we’re going to have a good spring, and if we have a good spring, we’ll have a good year,” Burns said. “That’s the way it’s played out for years.”

Residential investment probably will increase 9.6 percent in 2011 after five years of declines, based on the median forecast of 30 economists at a Federal Reserve Bank of Chicago symposium in December. Housing starts likely will jump 17 percent to a three-year high of 688,000 in 2011, led by a gain in the construction of single-family houses, said Crowe of the National Association of Home Builders.

“The sales pace for new homes will improve as we move through the spring, unless something comes along to derail the economy,” said James Wilson, director of research for JMP Securities LLC in New York. “Demand seems to be coming back.”

Date: 08 February 2011 | For the full report, please visit http://www.bloomberg.com

Mortgage Applications in U.S. Fall to Lowest Level in Two Years

Mortgage applications in the U.S. fell last week to the lowest level since November 2008, a reminder any housing recovery will take time to develop.

The Mortgage Bankers Association’s index of loan applications decreased 13 percent in the week ended Jan. 21, figures from the Washington-based group showed today. Both refinancing and purchase applications fell.

“Usually when rates go up, refinancing goes down,” Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts, said before the report. “We don’t see existing home sales any higher at the end of the year.”

Declining home prices and rising lending rates may prompt Americans to hold off on both refinance and purchase applications. Any lasting recovery in the housing market hinges on lowering unemployment, which had been at 9.4 percent or higher for 20 months, the longest since monthly records began in 1948.

The refinancing gauge dropped 15 percent to the lowest in a year, while purchase applications fell 8.7 percent to the lowest level since October, the mortgage bankers’ group said.

Residential real-estate prices dropped in November by 1.6 percent from a year earlier, the biggest annual decline in a year, according to the S&P/Case-Shiller index of home values in 20 cities released yesterday.

Confidence among U.S. homebuilders has stagnated as builders are reluctant to start projects while foreclosures mount. The National Association of Home Builders/Wells Fargo sentiment index registered a reading of 16 in January, the same as the past two months, data from the Washington-based group showed last week. Readings below 50 mean more respondents said conditions were poor.

Date: 26 January 2011 | For the full report, please visit http://www.bloomberg.com

Housing’s Anemic End to Five-Year Slump Means Little Boost to U.S. Economy

This may be the year the U.S. housing market starts crawling up from rock bottom. Held back by foreclosures, the pace will be so weak it won’t do much for economic growth.

Home prices probably will start to gain in 2011’s third quarter and rise 0.6 percent for the year, the first annual advance since 2006, according to Fannie Mae, the largest U.S. mortgage buyer. Real residential investment, an inflation- adjusted measure of homebuilding, will increase 9.6 percent in 2011 after five years of declines to a record low, based on the median forecast of 30 economists at a Federal Reserve Bank of Chicago symposium last month.

“There’s a good chance of a housing turnaround this year, but it’s not going to be enough to give much help to the economy,” said Karl Case, co-creator of the S&P/Case-Shiller Index that tracks U.S. home prices. “We’re coming off 50-year lows and we still have to deal with the foreclosure mess.”

Housing demand may be stabilizing after transactions plunged last year. Home sales and construction will rise in every quarter of 2011, according to estimates by the Mortgage Bankers Association, the National Association of Realtors, Fannie Mae and Freddie Mac. Lender delays in pushing through foreclosures may be the biggest challenge to a broader recovery, said Mark Zandi, chief economist for Moody’s Analytics Inc.

Housing was a driver of economic growth before its collapse led to the worst recession since the 1930s. Residential investment contributed half a percentage point to gross domestic product growth in 2004, an 18-year high that outstripped defense spending, according to Bureau of Economic Analysis data. Last year, inflation-adjusted investment in new homes probably drained 0.17 percentage point from GDP, based on the average of 2010’s first three quarters.

Affordability and a decline in the inventory of homes for sale will boost demand for housing in 2011, said Joel Naroff, president of Naroff Economic Advisors in Holland, Pennsylvania.

The National Association of Realtors’ affordability index, a gauge of median income against home prices, reached an all- time high of 184.5 in November. The number of new homes available for sale dropped to a 42-year low in that month, while the inventory of previously owned homes on the market fell to 3.7 million, the third consecutive decline, according to data from the Commerce Department and the Realtors group.

“This may be the year we see the beginning of a normal housing market outside foreclosure-overwhelmed areas,” such as California, Arizona, Nevada and Florida, Naroff said. “That doesn’t mean housing is going to be great, because we’re coming off such low levels.”

Date: 12 January 2011 | For the full report, please visit http://www.businesstimes.com.sg

Mortgage applications ebbed at year end: MBA

Applications for U.S. home mortgages ebbed in the last two weeks of the year amid the holiday season as loan rates hovered around their highest levels in seven months, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity rose 2.3 percent for the week ended December 31 and dipped 3.9 percent in the prior week.

The index has been dragged lower since October by applications to refinance loans, as a spike in interest rates reduced incentives for the homeowners that can qualify under today’s tight credit standards. The MBA expects total loan originations will drop to $967 billion this year, down 36 percent from 2010 and less than half that of 2009.

Fixed 30-year mortgage rates jumped to 4.93 percent in the week ending December 24, the highest since May 7, before ending the year at 4.82 percent, the MBA said. The rate is three-quarters of a percentage point higher since early October, as reports of solid consumer spending, and expectations of government and Federal Reserve stimulus plans lifted 2011 outlooks.

Relatively soft application volume follows other recent data points that suggest the U.S. housing market may be on the verge of another downturn. Single-family home prices in October dropped for the fourth straight month, according to the latest Standard & Poor’s Case-Shiller index, and analysts are predicting more declines under the weight of foreclosures.

Date: 05 January 2011 | For the full report, please visit http://www.reuters.com